Posted by: Sarah Lacy on April 24, 2006

I’m officially declaring software as a service the new security software. Back in 2001 or so, word got around that every new security company would make a boat load of money, so everyone started one and everyone invested in one. For the next few years that lead to incessant pitches of little security startups that people like me had to wade through. Guess what? Very few of them had big exits. Most just got bought for a few million by Symatnec or Cisco or McAfee. What was supposed to be the new home run in software was at best, just the new base-hit.

Today, it's software as a service. Yes, it's a real trend. Yes, Salesforce, NetSuite, RightNow and a few others are doing quite well--building some of the more exciting software companies in a long time. No one is denying that. But when I did a story for BusinessWeek Online about how Microsoft, SAP and Oracle were dealing with the trend, I got scores and scores of pitches for small startups started just around the time of Salesforce's IPO. That was a few weeks ago and the flood just isn't stopping.

But beyond the number, what's very security-like about it is how dime a dozen these companies are-- at least as reflected through the pitches. Almost all of them read the same: "I read your story with great interest! Doing anything on smaller software as a service companies?(Fill in the blank) is the leading provider of on demand software for (Fill in the blank market). Do you have time for a 15 minute briefing?"

If I'm feeling inundated, imagine how CIOs are feeling. I'm wondering if there's starting to be a software as a service backlash out there? Curious to hear your thoughts, all, so please comment away.

Reader Comments

Monica Miller

May 22, 2008 7:00 PM

I'm very surprised you don't have at least 100 comments on this post by now. As for SaaS as the new security software? Uh uhn.

I work with a number of SaaS-based companies, ranging from project management to performance management to profit optimization for manufacturers - definitely not part of the dime-a-dozen crowd. These SaaS companies have big customers, real revenues and multiple years under their belts offering valuable and unique products, and they are just the tip of the iceberg.

I'm convinced that SaaS isn't just a software trend - it will be the new standard technology delivery method, with so many benefits it makes installed software seem archaic and backwards. Look out for high-powered technologies available via SaaS: think analytics, intelligence and mega number crunching. The evolution has begun and it is exciting to see how fast and just where it will go.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.